Local MLS bid still on, investor says - The Vancouver Sun

December 3, 2008

Group confident BC Place renovations will proceed

VANCOUVER — Should we pay or should we go?

That's the question facing the Vancouver Whitecaps and five other ownership groups bidding for two Major League Soccer franchises as a global recession forces them to reconsider the $40-million US franchise fee.

A Montreal bid from the Saputo and Gillett families was rejected by MLS two weeks ago because they wanted to pay less than $40 million.

A SportsBusiness Journal report this week said the Vancouver group won't fully commit to the expansion fee until $350 million Cdn is secured for the renovation of BC Place Stadium.

However, former Yahoo! executive and Vancouver bid applicant Jeff Mallett stressed the group is confident that planned renovations will proceed at BC Place, making it MLS-ready by the time the Whitecaps begin play there in 2011.

He said his group still expects to pay a $40-million fee if it is selected to join the league. Toronto FC paid a $10 million franchise fee three years ago while Seattle and Philadelphia paid $30 million each to begin play in 2009 and 2010, respectively.

"We know the league is looking for $40 million and we respect that," Mallett said in an interview. "All our financial modelling has been done around the $40 million.

"When it gets down to the final face-to-face meetings, both sides will look at all things considered and make the appropriate move at that time."

Mallett is part of a four-person ownership group headed by Whitecaps owner Greg Kerfoot, along with NBA star Steve Nash and Boston Celtics part-owner Steve Luczo. Other cities bidding for franchises include Portland, Ottawa, St. Louis, Miami and Atlanta.

Uncertainty around the $40-million franchise fee appears to be growing as the St. Louis bid group is reportedly okay with the fee as long as credit markets improve. The Miami bid group indicated it would pay $40 million as long as no one else pays less.

MLS senior vice-president of marketing Dan Courtemanche said the league has no plans to cut the fee.

"Clearly with trying economic conditions, it's a concern for every business as to how they're investing their dollars," he said. "But we still have more interest in MLS expansion now than at any other point in our history.

"The groups understand the fee and they are moving forward under those guidelines."

Courtemanche said the fee is based on several factors, including the $30 million paid by Seattle and Philadelphia and the fact that a 50-per-cent interest in the MLS Houston Dynamo recently sold for more than $22.5 million.

The franchise bidding process has clearly hit a few bumps, with the departure of the Montreal bid and a demand from Miami bidders FC Barcelona and Marcelo Claure that if selected, they be allowed to begin play in 2010 instead of 2011.

Courtemanche said the league would be flexible on that issue.

"If we have the right ownership group with the right facility in the right market, we'll go when they have the best chance for success, whether it's 2010 or 2011," he said.

The Whitecaps have signed a letter of intent to play in a renovated BC Place for five years, starting in 2011, but a formal lease has not yet been completed.

Stadium owner PavCo plans to spend $65 million renovating the stadium before the 2010 Olympics and then an estimated $200 million-plus on a retractable roof, using the same technology found at Commerzbank Arena in Frankfurt, Germany.

PavCo president Warren Buckley said it's too early to determine the final cost of the roof project.

"I don't know the number yet. We haven't even gone out to tender," he said. "We're about 60- to 65-per-cent done on the design and hope to tender the steel and the fabric by early 2009. We haven't even had a speculative number from the engineers."

Buckley said the business case for the roof project must be approved by the province based on final costs and the value of the land to be developed around the stadium.